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Philip Hammond Pledges Support for High Street Businesses

Ryan Willis

The continuing rise of online retail, stagnant wages and soaring business rates have all led to what can only be described as an annus horribilis for the high street. While many retailers are battling on and some are even thriving in the difficult conditions, a litany of big name brands have fallen by the wayside. Maplin, Debenhams, House of Fraser and Toys R Us are just a few of the companies that have been forced into store closures or administration over the past year, leading to thousands of job losses.

Given this stark tale of financial woe, it’s clear that something needed to change. Thankfully, in his latest Budget, Philip Hammond finally seems to have acknowledged the turmoil the high street is in.  

What was announced?

In his third Budget as Chancellor, Philip Hammond took action to provide some respite from the perfect storm many high-street retailers now face. His first move was to set aside £900m in business rates relief, knocking a third off the business rates bill of some 500,000 small retailers whose premises have a rateable value of less than £51,000. That measure will benefit 90% of independent shops, pubs and restaurants and cut the average bill by up to £8,000.  

Hammond also unveiled a new £400m digital services tax that will be levied on tech giants such as Google and Amazon. The tax will be payable on digital services like advertising and streaming entertainment online. Currently, these tech companies only pay tax where they are based rather than where their services are accessed. That has led to lower tax liabilities which have further tipped the balance in online retailers’ favour.

Finally, the Chancellor pledged an additional £650m to rejuvenate high streets and their transport links. The Future High Streets Fund will include a high streets taskforce to support local leadership and funding to strengthen community assets and infrastructure.

What did the Chancellor say?

Addressing the problems facing the high street, Mr Hammond said: “If Britain’s high streets are to remain at the centre of our community life, they will need to adapt. Today, we support them to do so.

“We will provide £675m of co-funding to create a Future High Streets Fund to support councils to draw up formal plans for the transformation of their high streets, to invest in the improvements they need and [...] delivering much-needed footfall to high street businesses.

“For the next two years [...] for all retailers in England with a rateable value below £51,000, I will cut their business rates bill by one third. That’s an annual saving of up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes”.   

Too little too late for the high street?

So, will these new measures save the high street? According to the small business community, probably not – at least not on their own. While many retailers and their landlords have welcomed the business rates reduction, it certainly wouldn’t have prevented any of the high-profile retail collapses over the past year. That’s because rateable values on prominent high-street sites tend to be far higher than the £51,000 threshold. The cut also has to be considered against last year’s business rates hike that damaged many small retailers.  

The Chief Executive of the British Retail Consortium, Helen Dickinson, said: “Rather than tinkering around the edges, struggling high streets require wholesale reform of business rates in order to thrive. The issue remains that the business rates burden is simply too high”.

Image credit: Raul Mee

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